Mexico and Canada must stand together on NAFTA

The reality show organized by the White House on Monday to announce a “deal” between Mexico and the United States on trade was nothing more than a typical Donald Trump sham.

By inviting the Mexican and U.S. negotiators into the Oval Office to witness the U.S. President’s misleading statement about a bilateral agreement to replace and rename NAFTA, and the ill-starred telephone conversation with Mexican President Enrique Pena Nieto, Mexico fell right into the hands of what the U.S. President does best: misstate facts and turn things around to his benefit in order to distract from the many other problems he faces. But lurking behind Mr. Trump’s bravado is a much more serious travesty surrounding the trilateral North American free-trade agreement negotiations.

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When Mexico and the United States decided to concentrate the past several weeks on trying to solving the thorny issue of regional content for automotive rules of origin without the third amigo at the table, it was perfectly reasonable for Canada to sit out that particular stage of the discussions. This was a negotiation that only involved the United States and Mexico basically reaching an agreement that would then be acceptable as well to Canada, given that average wages in both the developed economies of North America are US$16 an hour or higher, while Mexico’s are well below that threshold.

However, having finally reached an agreement on those rules of origin, the natural sequel would have been to have Canada back at the table for trilateral discussions on all the other pending issues, i.e. dispute settlement, sunset clause, government procurement, intellectual property, etc. Instead, pressured by deadlines faced by the White House and the end of the Pena Nieto administration, Mexico and the United States decided to continue bilateral negotiations aimed at resolving all the remaining issues still on the table, including those on which Canada has a strong position, but without Canada’s presence. Although it is possible that back-channel contacts with Canada kept its negotiators informed on what was going on, by excluding them from around-the-clock meetings in Washington, both the United States and Mexico ended up throwing Canada under the bus and are now pressuring Ottawa to take or leave the bilateral deal reached between them.

Ever since Mr. Trump decided NAFTA was “one of the worst agreements ever signed” and began his election campaign with continuous disparaging remarks about Mexico and Mexicans, there were voices in Canada – including former prime minister Stephen Harper – that proposed dumping Mexico and returning to the bilateral treaty (Canada-U.S. FTA) that was in force before NAFTA. According to some holding that view, Mr. Trump’s problem was with Mexico – drug trafficking, immigration, organized crime, the wall, etc. – while Canada’s traditional “special relationship” with Washington would make it much easier to negotiate bilaterally without Mexico. However, from the beginning, I and other Mexicans have insisted that Mexico and Canada remain closely allied in these negotiations. Together, our leverage would help control some of the damage that the United States wanted to inflict on NAFTA and make sure that unacceptable proposals would be jointly opposed. How ironic that it’s now the Canadians who are causing problems for Mr. Trump and the Mexicans who did a run-around and “finalized” a bilateral deal with Washington.

It is doubtful that what has happened this week will effectively conclude the NAFTA negotiations for the following reasons: Congress has only given President Trump authorization to submit a trilaterally approved text, not a bilateral one; Canada has its own bilateral issues with the United States that also need to be resolved and which don’t involve Mexico, i.e. supply management; there has already been strong opposition to the “bilateral deal” from American business groups, trade associations and U.S. legislators from both sides of the aisle; and it is legally doubtful whether Mr. Trump can both change the NAFTA name and withdraw from the existing agreement without prior congressional approval.

Although the Canadian government has put a brave face on this turn of events and agreed to come back to the negotiating table, I am deeply disappointed at Mexico’s decision to sideline our Canadian friends and partners. The statement by Mexican Foreign Minister Luis Videgaray to the effect that “… with or without Canada, Mexico has a bilateral ‘deal’ with the United States” is wrong, and not reflective of the close relationship we are proud to maintain.

With Canada back at the table, I very much hope its interests can be met in the coming talks and a real trilateral deal achieved, no matter how long it takes. We cannot sacrifice substance for formality. Whatever is eventually agreed to by all three North American partners will govern our economic relationships over the long term and therefore should adequately reflect what both Canada and Mexico want out of a revised trilateral agreement.

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